Shareholder 02 Behind the fi Gures Quarterly Magazine ING Group November 2006
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Shareholder 02 Behind the fi gures Quarterly Magazine ING Group November 2006 Philippe Damas: Why knowledge matters Q3: Balancing growth and returns Private equity: blessing or curse? ING Shareholder 02 – November 2006 1 153187_Share02EN_025-048.indd 1 10-11-2006 17:11:31 Dear reader, The theme of the second issue of ING Shareholder Our feature stories in this edition continue the This magazine is a quarterly publication is dialogue. Alongside our website, this magazine dialogue theme. The article on private equity by ING Group for shareholders and others is itself one of the ways by which we try to keep highlights the importance of good dialogue interested in ING. you informed on activities within ING and the between management and shareholders, and Subscribe to ING Shareholder strategy and thinking that lies behind those indeed between investors and the wider world. Fax (+31) 411 65 21 25 activities. And if the piece on private banking tells us any- Mail P.O. Box 258, 5280 AG Boxtel thing, it is that the banks that will succeed in this The Netherlands But communication can hardly be called dialogue sector in the future are the ones that can enter a Internet: www.ing.com if it is all one-way. Which is why we would genuine dialogue with their highly-demanding encourage you to email us (address below). With clientele, one that goes deeper than just market- Editorial offi ce your views and comments on ING Shareholder, ing and good intentions. ING Group, Corporate Communications with topics you would like to see covered in Investor Relations Department future issues, with any wider questions you may It has been said that the highest form of dialogue P.O. Box 810, 1000 AV Amsterdam have concerning ING, or simply to subscribe to is collaboration and this is the inspiration for The Netherlands the magazine - because to receive ING Share- the ING-sponsored exhibition on Brueghels and Tel. (+31) 20 541 54 60 holder you don’t have to be an ING shareholder. Rubens, A Working Friendship. Entering into the Fax (+31) 20 541 54 54 Anybody interested in ING or the topics we cover spirit of this idea of friendship, you will fi nd in this [email protected] is welcome to subscribe. edition a voucher allowing you and a friend to ISSN 1380-0418 visit the exhibition together for the price of one. Design So how does ING shape up in terms of dialogue VisualSpace with its stakeholders? Though things can always Finally, initial reactions to ING Shareholder have be better, the current signs are encouraging. A been positive and we hope this second issue to Photography recent, independently-conducted reader survey provide what you want from this magazine. If it Michiel van Nieuwkerk on the ING Group Annual Report yielded some doesn’t, let us know! Bernd Böhm very heartening results (for details, visit our Illustration website www.ing.com). The infl uential Investor The editorial team Herman van Haasteren Relations Magazine recently awarded ING CEO, Michel Tilmant, Europe’s ‘Best Investor Relations i To send us your views or queries, or to Print subscribe to ING Shareholder, please email: by a CEO’. While on the back page, you can see [email protected] Thieme Amsterdam our ranking on the 2006 Accountability Rating. ING website: www.ing.com © 2006 ING Groep N.V. All rights reserved. While every care was taken in the preparation of this magazine, no responsibility can be accepted for any inaccuracies. 2 ING Shareholder 02 – November 2006 153187_Share02EN_025-048.indd 2 10-11-2006 17:11:37 ING Shareholder 02 – November 2006 Contents Business & Markets 4 Battling for market share in the gilt-edged world of private banking 8 Business News 6 ING Direct hits Chicago 4 6 Bricks and mortar – the added value of funds focused on property 6 Natural synergy - how bancassurance delivers value in practice 6 The changing face of commodities trading 6 Funds with a difference – ING’s pioneering new microfi nance funds 10 Into the branding fast lane – some Q&A’s on ING’s new F1 sponsorship 10 Strategy & Results 11 A glimpse under the bonnet – a close look at the growth engines meant to deliver future shareholder value 14 Financial results 3rd quarter 2006 14 Views & Analysis 18 The end of the world as we know it? Four experts cast light on the economic consequences of Private Equity and Hedge Funds 22 Basel II be or not to be? – The concerns of ING vice-chairman over the implementation of Basel II 23 Brushes with genius – ING’s latest forays into the art world 18 23 ING Shareholder 02 – November 2006 3 153187_Share02EN_025-048.indd 3 10-11-2006 17:11:37 4 ING Shareholder 02 – November 2006 153187_Share02EN_025-048.indd 4 10-11-2006 17:11:44 Business & Markets The power of Philippe Damas select knowledge Today, private banking is about providing clients with tailored solutions in a global setting. And as competition for private wealth grows, high-net- worth individuals fi nd themselves swamped with products and services. So how does ING Private Banking give its customers what they really want? Private wealth is growing worldwide and with it the demand for currently in the top 40 in terms of assets under management private banking services. According to a report by Capgemini – we want to provide our clients with added value by focusing on and Merrill Lynch, global wealth has been increasing steadily to a specialised products. In Asia, for example, our clients appreciate staggering USD 33.3 trillion at the beginning of 2006. And as a our knowledge of emerging market bonds.” growing wealth market also attracts greater supply, the competi- “Currently, the bulk of profi ts come from our core domestic tion among fi nancial service providers is incredibly stiff. markets of the Netherlands and Belgium, which are fairly conser- But despite the number of competitors, ING Private Banking vative in terms of what customers want – low risk and positive (ING PB) is holding its own. After several years of divestments, returns. However, we’re pretty sure that our income from Asia recent organic growth has been steady and impressive, with assets will surpass that from the domestic markets in the coming years. under management (AUM’s) increasing from EUR 47 billion in Q3 In Asia you’re dealing mostly with entrepreneurs who know their 2005 to EUR 57 billion in Q3 2006. Moreover, Private Banking is business environments well and are willing to take a bit more proving a reliable and effi cient source of growing profi ts for ING, risk.” providing low capital requirements and relatively high returns. “We expect continued growth from all the regions in which ING PB currently operates – Benelux, Switzerland, Latin America Help through the maze and Asia in particular. We are also developing new initiatives in “Our success can be attributed to our strategy, which has been Latin America, the Gulf/Middle East, and Central and Eastern to focus on customer, product and region,” says Philippe Damas, Europe, and focusing on non-resident Indians (NRI’s). Of these, the global head of ING Private Banking. “As you know, private most successful to date has been our NRI business, which started banking is based on an advisory model. At ING Private Banking, in Hong Kong and Singapore and is expanding to Dubai. In Latin we focus on individual clients with available assets of EUR 1 to 5 America, we are building a local presence in Mexico and Brazil .” million in Belgium and the Netherlands and EUR 5 to 15 million in other markets. We help them fi nd their way through an increas- Quality advice adds value ingly complex maze of fi nancial products. To do this successfully, “Private banking is very much a people business,” says Bernard we have to focus on individual needs and are therefore organisa- Coucke, Head of Europe and Deputy Global CEO of ING PB. “We tionally decentralised. But where the Group goes, we go. Sharing have to be in tune with our clients and provide them with indi- the brand name, processes, clients and products. We get most vidual solutions that cater to their specifi c needs. Of course, the of our clients through internal referrals, especially in Belgium knowledge ING offers has a wide scope and includes customised and the Netherlands. As a smaller player in the market – we are advice on everything from pension and estate planning to ING Shareholder 02 – November 2006 5 153187_Share02EN_025-048.indd 5 10-11-2006 17:11:48 Business & Markets specialised tax guidance and investment advice. And we not only “The war for talent is so fi erce serve our clients with top technical expertise in fi nancial products, that you cannot afford not but also in the way in which we provide that advice. One recent example from the Netherlands is a case in point: one of ING to boast about your brand” PB’s clients wanted to expand his real estate activities and the competition was beating ING on price. But the ING PB team came up with an innovative real estate loan facility that enables fl exible real estate management while avoiding lengthy credit approval constant rate by continuing to both refi ne the ING Private Banking processes. The client was delighted and willing to pay more value proposition and develop new platforms and products.” because of the added value provided.“ In these core markets, ING PB enjoys a good name and as Ideally, ING PB wants to offer highly specialised products across a professional banker with an open architecture it can look for regions.